Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). The forward-looking statements are principally, but not exclusively, contained in "Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about management's confidence or expectations, and our plans, objectives, expectations, and intentions that are not historical facts. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "seek," "expects," "plans," "aim," "anticipates," "believes," "estimates," "is likely," "projects," "forecasts," "predicts," "intends," "think," "potential," "objectives," "optimistic," "strategy," "goals," "sees," "new," "guidance," "future," "continue," "drive," "growth," "long-term," "projects," "develop," "possible," "emerging," "opportunity," "pursue" and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in detail in our Annual Report on Form 10-K for the year ended December 31, 2025 and our other filings with the SEC. You should carefully review all of these factors, as well as other risks described in our public filings, and you should be aware that there may be other factors, including factors of which we are not currently aware, that could cause these differences. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Harvard Bioscience, Inc. is referred to herein as "we," "our," "us," and "the Company."

Overview

Harvard Bioscience, Inc., a Delaware corporation, is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental advances in life science applications, including research, drug and therapy discovery, bioproduction and preclinical testing for pharmaceutical and therapy development. Our products and services are sold globally to customers ranging from renowned academic institutions and government laboratories to the world's leading pharmaceutical, biotechnology and contract research organizations ("CROs"). With operations in the United States, Europe and China, we sell through a combination of direct and distribution channels to customers around the world.

Our business is affected by global and regional economic trends and uncertainties. Our revenue has been and may continue to be affected by our customers forgoing or delaying purchases of our products and services as a result of ongoing uncertainty with respect to the level and timing of funding from the U.S. National Institutes of Health (the "NIH") or similar government sources. Our business has also been affected by the imposition of increased tariffs on shipments of products between the United States and other countries, and in particular between the United States and China. Our revenue has been and may continue to be affected by greater restrictions and economic disincentives on international trade, including these tariffs. Products and services that we obtain from overseas sources have been and may continue to be affected by these tariffs, resulting in increased costs to our business.

If these trends are prolonged or are more severe than anticipated, our business, results of operations, and cash flow may be materially impacted.

Strategy

As the life sciences industry accelerates toward New Approach Methodologies ("NAMs"), Harvard Bioscience expects to evolve from a traditional tools provider into a leading enabler of Translational Medicine - positioned to bridge the gap between laboratory research and human clinical success. Building on its gold-standard preclinical foundation, the Company plans to align its portfolio, innovation pipeline, and operating model around four strategic pillars, leading the translational bridge, new product introduction, consumables revenue expansion and operational excellence and disciplined growth.

In addition, we have taken steps to rationalize our product portfolio and improve our operating cost structure. These activities have included the discontinuation of certain non-strategic products, the consolidation of our global operating footprint, and the reduction of our headcount in Europe and North America.

In January 2026, the Company developed a comprehensive plan, referred to as Project Viking, for the strategic consolidation of its manufacturing operations to improve efficiency and support long-term growth.

Selected Results of Operations

Three months ended March 31, 2026, compared to three months ended March 31, 2025

		Three Months Ended March 31,
(dollars in thousands)		2026				% of revenue				2025				% of revenue
Revenues		$	20,755							$	21,774
Gross profit			12,244				59.0	%			12,184				56.0	%
Sales and marketing expenses			5,335				25.7	%			4,971				22.8	%
General and administrative expenses			4,702				22.7	%			5,185				23.8	%
Research and development expenses			2,326				11.2	%			2,321				10.7	%
Amortization of intangible assets			820				4.0	%			1,160				5.3	%
Goodwill impairment			-				0.0	%			47,951				220.2	%
Other operating expenses			235				1.1	%			264				1.2	%
Interest expense			1,728				8.3	%			933				4.3	%
Income tax expense (benefit)			117				0.6	%			(454	)			-2.1	%

Revenues

Revenues decreased $1.0 million, or 4.7%, to $20.8 million for the three months ended March 31, 2025, compared to $21.8 million for the three months ended March 31, 2025. The decrease in revenues was primarily due to lower sales from academic research institutions in the Americas and distributors in Asia Pacific.

Gross profit

Gross profit was $12.2 million for both the three months ended March 31, 2026 and the three months ended March 31, 2025, primarily due to cost reductions in previous year plus favorable product mix. Gross margin was 59.0% for the three months ended March 31, 2026, compared to 56.0% for the three months ending March 31, 2025. The increase in gross margin was primarily the result of favorable product mix.

Sales and marketing expenses

Sales and marketing expenses increased $0.3 million, or 7.3%, to $5.3 million for the three months ended March 31, 2026, compared with $5.0 million for the three months ended March 31, 2025. This increase was primarily due to additional personnel, and an increase in travel, trade show, and other promotional expenses.

General and administrative expenses

General and administrative expenses decreased $0.5 million, or 9.3%, to $4.7 million for the three months ended March 31, 2026, compared with $5.2 million for the three months ended March 31, 2025. The decrease was primarily due to reduced compensation costs and professional fees.

Research and development expenses

Research and development expenses were $2.3 million for both the three months ended March 31, 2026 and the three months ended March 31, 2025. An increase in project and travel costs in the three months ended March 31, 2026 was offset by reduced compensation costs.

Amortization of intangible assets

Amortization of intangible assets included in operating expenses was $0.8 million for the three months ended March 31, 2026, compared with $1.2 million for the three months ended March 31, 2025.

Goodwill impairment

During the three months ended March 31, 2025, we identified a triggering event for goodwill impairment, including the sustained decrease in our stock price, our recent operating results, liquidity risk and the current macroeconomic conditions impacting the life sciences industry, requiring an interim impairment test. We recorded a non-cash goodwill impairment charge of $48.0 million in connection with the interim impairment test in the three months ended March 31, 2025.

Other operating expenses

Other operating expenses for the three months ended March 31, 2026 were $0.2 million, compared with $0.3 million for the three months ended March 31, 2025. During the three months ended March 31, 2026, other operating expenses included $0.2 million of restructuring costs in connection with Project Viking. During the three months ended March 31, 2025, other operating expenses included a fee of $0.2 million in connection with the receipt of employee retention credits under the CARES Act and $0.1 million of restructuring costs in connection with headcount reductions in North America and Europe.

Interest expense

Interest expense increased $0.8 million, or 85.2%, to $1.7 million for the three months ended March 31, 2026, compared with $0.9 million for the three months ended March 31, 2025. The increase was primarily due to the higher interest rate and amortization of deferred financing costs related to the 2025 Loan Agreement discussed above.

Other expense, net

Other expense, net for the three months ended March 31, 2026, was $0.4 million and included costs of $0.4 million in connection with the Company's reverse stock split. Other expenses, net for the three months ended March 31, 2025, were $0.2 million, which was primarily related to a $0.2 million loss on foreign currency.

Income tax expense (benefit)

The income tax expense (benefit) was $0.1 million and $(0.5) million for the three months ended March 31, 2026 and 2025, respectively. The effective tax rates for the three months ended March 31, 2026 and 2025 were (3.6%) and 0.9%, respectively. The higher effective tax rate during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the tax effect of nondeductible stock compensation and the release of reserves related to uncertain tax positions. The Company's effective tax rate for the three months ended March 31, 2026, was different than the U.S. statutory rate primarily due to changes in valuation allowances associated with the Company's assessment of the likelihood of the recoverability of deferred tax assets.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and our shelf registration statement that provides for the issuance of common stock, preferred stock, warrants and units up to an amount equal to $100 million (the "2024 Shelf Registration Statement"). Our expected cash outlays relate primarily to cash payments due under our Loan and Security Agreement (the "2025 Loan Agreement"), entered into with certain financial institutions party thereto as lenders and BroadOak Income Fund, L.P., as the administrative agent and collateral agent on December 17, 2025, as well as salaries, inventory, capital expenditures, and other operating costs. We held cash and cash equivalents of $7.1 million and $8.6 million as of March 31, 2026 and December 31, 2025, respectively. Borrowings outstanding were $40 million as of March 31, 2026 and December 31, 2025, respectively.

On December 17, 2025, the Company entered into the 2025 Loan Agreement and completed a comprehensive refinancing of the Credit Facility, resulting in a new maturity date and improved likelihood of covenant compliance. For additional details on the 2025 Loan Agreement and refinancing, see the discussion in Note 7 to the Condensed Consolidated Financial Statements (Unaudited) included in Part I, Item 1 of this report. Management has evaluated the Company's ability to continue as a going concern for the twelve months following the issuance of these financial statements and concluded that (1) the conditions and events that initially raised substantial doubt have been alleviated and (2) substantial doubt does not exist as of the issuance date. These financial statements are therefore prepared on a going-concern basis.

Under the 2025 Loan Agreement, the Company is required to maintain certain financial covenants that are based on financial measures not presented in accordance with U.S. generally accepted accounting principles. The Company was in compliance with these covenants, including the minimum liquidity requirement of $3.0 million at all times and the minimum adjusted EBITDA requirement, measured on a trailing 12-month basis, of at least $6.0 million for the fiscal quarters ending March 31, 2026 and December 31, 2025.

The Coronavirus Aid, Relief, and Economic Security Act of 2020 provided an employee retention tax credit ("ERTC") that was a refundable tax credit against certain employer taxes. The Company received ERTC refunds of $3.6 million during the year ended December 31, 2025. The Company's compliance with the program's qualifications may be subject to audit until May 2029, which is when the statute of limitation expires.

The following table sets forth the significant sources and uses of cash for the periods set forth below:

		Three Months Ended March 31,
(in thousands)		2026				2025
Net cash (used in) provided by operating activities		$	(662	)		$	2,986
Net cash used in investing activities			(620	)			(683	)
Net cash used in financing activities			(9	)			(1,204	)
Effect of exchange rate changes on cash			(225	)			339
(Decrease) increase in cash and cash equivalents		$	(1,516	)		$	1,438

Cash (used in) provided by operations was $(0.7) million and $3.0 million for the three months ended March 31, 2026 and 2025, respectively. Cash flow from operations for the three months ended March 31, 2026 was negatively impacted by cash outflows from inventories of $1.5 million, compared with a favorable impact to cash flows of $0.7 million for the three months ended March 31, 2025. Cash flow from operations was also negatively impacted by $0.4 million of prepaid inventory and insurance.

Cash used in investing activities was $0.6 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively. Cash used in investing for the three months ended March 31, 2026 consisted of $0.6 million of capital expenditures for manufacturing and capitalized software development. Cash used in investing activities for the three months ended March 31, 2025 primarily consisted of capital expenditures in manufacturing and capitalized software development of $0.7 million.

Cash used in financing activities was $0.0 million and $1.2 million for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026, we paid $0.1 million in debt issuance costs as part of the 2025 Loan Agreement and we received $0.1 million in cash proceeds from the exercise of warrants.

Impact of Foreign Currencies

Our international operations in some instances operate as a natural hedge, as we sell our products in many countries and a substantial portion of our revenues, costs and expenses are denominated in foreign currencies, primarily the euro and British pound.

During the three months ended March 31, 2026, changes in foreign currency exchange rates resulted in a favorable effect on revenues of $0.6 million and an unfavorable effect on expenses of $0.1 million. The (loss) gain associated with the translation of our foreign equity into U.S. dollars included as a component of other comprehensive loss was $(0.6) million and $1.3 million for the three months ended March 31, 2026 and 2025, respectively. Currency exchange rate fluctuations included as a component of net loss resulted in a gain of $0.1 million for the three months ended March 31, 2026. Currency exchange rate fluctuations included as a component of net loss resulted in losses of $0.2 million for the three months ended March 31, 2025.

Critical Accounting Policies

There have been no material changes to the critical accounting policies underlying the accompanying Condensed Unaudited Consolidated Financial Statements and as set forth in Part II, Item 7 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Recent Accounting Pronouncements

For information on recent accounting pronouncements impacting our business, see "Recently Issued Accounting Pronouncements Yet to Be Adopted" included in Note 1 to our Condensed Unaudited Consolidated Financial Statements included in Part I, Item 1 of this report.